Starting a business with multiple brands - what's the best formation?

[aaronw]

Hi. Right now i'm starting a business. Initially from day 1 there will be one brand, from year 2 I plan to create another brand leveraging off of the same (or very similar) product, same manufacturing plant but with different branding / website / target market etc... From day 1 (i.e. now) what is the best way to go about forming the structure of the different brands (businesses) in terms of accounting? Is it one company with the registered brands all under it? Or each brand as a seperate legal entitity? Or one holding company with different entities under it?

Thanks for your advice in advance, Aaron.

 

[fantheflames]

I think you're better off creating different companies. Let's say you want to sell one of your brands in the future, it'd be much easier to do so if they are separate. I also think you'd be better off from a legal issue POV because then only one brand is at risk, not all of them. Definitely speak with an accountant so they can advise you on this!

 

[Scalloway]

I would suggest setting up each brand as a cost centre in the accounts to start with. Having several companies increases the admin effort and the compliance costs.

 

[AndreasC]

I agree with Scalloway. If the brands grow you can change the structure but if you're a small business and conscious of fees/cost then this is the best route.

If you have serious backers and this will fly off straight away then separate companies with a parent company up top may be best but do speak to an accountant

 

[aaronw]

Great thank you everyone for your input. I think one company with registered brands within it seems the best way to start, and somehow seperating them within bookkeeping. Anybody have any advice / experience doing this in Xero?

 

[AndreasC]

Xero Central

central.xero.com

 

[kevinhaart]

I am almost completely sure that each brand should act as a separate legal entity.

 

[UK Contractor Accountant]

Set up a tracking category with tracking options​

You can set up a tracking category with tracking options however you want, so we'll use an example to show you how it works.


Let's say you're a business with seven work locations. You can track sales at each location by setting up a tracking category with tracking options for each location.

1. In the Accounting menu, select Advanced, then click Tracking categories.
2. Click Add Tracking Category.
3. Under Tracking category name, enter the name of the tracking category. Enter your tracking option names under Category options.
4. Click Save.

 

[KaidenLevine]

Hi Aaron, congratulations on starting your business!
In terms of accounting and legal structure, there are different approaches you can take for multiple brands under the same umbrella. Here are three common options:

1. One company with multiple brands: You can register one company and have multiple brands under it. This option is simpler and more cost-effective, as you don't have to set up and maintain multiple legal entities. However, you'll need to keep track of the financials and branding for each brand separately.
2. Separate legal entities for each brand: You can create separate legal entities (such as LLCs or corporations) for each brand. This option provides more protection and separation of liability between the brands, but it can be more complex and expensive to set up and maintain.
3. Holding company with different entities under it: You can create a holding company that owns multiple subsidiaries, each of which represents a different brand. This option provides more flexibility and protection, but it can also be more complex and costly.

Ultimately, the best approach depends on your specific business needs and goals. It may be helpful to consult with a lawyer or accountant to determine the best structure for your situation. Good luck with your business!

 

[Paul Kelly ICHYB]

Xero and any accounts package should track things the way you set them up.

You can track on a spreadsheet and enter totals, have separate categories of products or even different accounting/journal settings.

 

[Chris Ashdown]

I would register each company as a trademark registered to yourself and not to the main company, that way if you ever want to sell it it belongs to you.
You can still make the main company manufacture both items either just by doing it or maybe making a licence between the two items so one pay a licence fee to you for each item used, but only having the main company showing on the accounts, and only worry about the licence money when it gets to £1000 which is when you have to register with HMRC